Asian fuel oil cracks hit 3-week high

London, (Quantum Commodity Intelligence) – Asian fuel oil cracks rallied strongly on Tuesday, with marine fuel 0.5% cracks rising $2/b to the highest level in more than three weeks as cash differentials firmed and the contango structure in the market flattened.

Despite the prospect of more heavy sour crude coming on to the market this month and next, with OPEC+  signalling no change for the increase in supply, the higher sulfur cracks rose $1.23/b to -$9.30/b from -$10.53/b FOB Singapore – the highest level since May 12.

Spot diesel cracks rose $0.50/b to $6.24/b for 10ppm basis FOB Singapore, which underpinned the move in the distillate-based marine fuel 0.5% at the same location from $1.39/b to $3.41/b – the highest level since 7 May.

The spread between the two swaps for June rose from $115/mt to $121/mt on the day, indicating ships fitted with scrubbers will be buying relatively cheaper fuel than those that are not.